Auto Revolution:

Rise of the lithium ion

battery megafactories

Toronto, Monday 24 April 2017

Benchmark World Tour 2017

Simon Moores | Managing Director

Benchmark Mineral Intelligence, UK

www.benchmarkminerals.com

What is Benchmark?

Price Assessment Subscriptions (Raw Materials)

Events

Lithium Graphite

Cobalt

Benchmark Membership

Tech Industrialists evolve, force convergence of multi billion dollar industries

Batteries

Auto, Tech & Energy Converge

Era of the semi mass market EV begins

Bolt (60kWh lithium ion)Model 3 (60-65kWh lithium ion )

LEAF 2017 (60kWh lithium ion )

What battery demand can we expect?

Lithium ion battery demand expectations by 2025 (GWh)

0 100 200 300 400 500 600

*BNEF Forecast @ 240GWh for EVs & Stationary of 240GWh + Benchmark’s mobile technology forecast of 60GWh

2016

70-75% EVs

Benchmark’s 2025 lithium demand based on battery forecasts

0 100,000 200,000 300,000 400,000 500,000

2016 2020

Tonnes

0 100000 200000 300000 400000 500000 600000 700000

Benchmark’s 2025 graphite demand based on battery forecasts

2016 2020

Tonnes

0 50000 100000 150000 200000

Benchmark’s 2025 cobalt demand based on battery forecasts

2016 2020

Tonnes

Lithium ion batteries

Rise of the lithium ion megafactories continues…

0

20000

40000

60000

80000

100000

120000

Annual Cap 2016 (MWh) Expanded Capacity (MWh)

100GWh

35GWh

20GWh

30GWh >>> 228GWh

Lithium in 2016: 222GWh’s worthCobalt in 2016: 226GWh’s worth Graphite Anode in 2016: 190GWh’s worth

0% 10% 20% 30% 40% 50% 60% 70%

China

US

Asia (ex-China)

Europe

The new lithium ion industry is a China story

Tesla is still important – business strategy/vertical integration

New plants still being constructed in Japan / Korea, but focus on China

Europe is slow

Megafactories by region

Lithium

Lithium Prices

$12,313/tonne (March 2017) $17,000/tonne (March 2017)

Lithium HydroxideLithium Carbonate

-40%

-20%

0%

20%

40%

60%

80%

100%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017(f)

Lithium Carbonate (ex-China) Price Trend: Average Y-O-Y

1 Year where prices declined in a decade

Source: Benchmark Mineral Intelligence Data, Lithium Price Assessments

Lithium Price Performance Year by Year

2006 2016 2020

Evolution of lithium’s end markets

67% 42% 22%

Lithium ion

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

2005-2008 2010-2014 2015-2016 2017-2020

Lithium Carbonate Lithium Hydroxide

Lithium Carbonate & Lithium Hydroxide: Long Term Averages (Nominal)

Source: Benchmark Mineral Intelligence Data, Lithium Price Assessments

Lithium Price expectations

• No huge oversupply of lithium

• 5 year growth trajectory: 12-15% a year

• Lithium Carbonate & Hydroxide Prices to remain high for the medium term

• No price crash

• Spodumene to fill the 2017-2018 supply deficit

• China has 30% excess capacity

• New brine resources 2020 and beyond

• M&A and JVs to continue

• Albemarle, Tianqi, Ganfeng most aggressive

Lithium trends to watch…

Graphite

Graphite Prices

$2,800/tonne (March 2017)

Uncoated Spherical Graphite

$780/tonne (March 2017)

Flake Graphite -100 mesh, 94-95%

Feedstock

Evolution of flake graphite’s end markets

2006 2016 2020

Lithium ion

0%

16%35%

$0

$5,000

$10,000

$15,000

$20,000

$25,000

2009-2013 2014-2017 2018-2020

CPSG Low CSPG High

Coated Spherical Graphite: Long Term Averages (Nominal)

Source: Benchmark Mineral Intelligence Data, Lithium Price Assessments

Graphite Price expectations

• 5 year growth trajectory: 13% a year

• Natural graphite anodes to increase market share over synthetic• Supply issue, improving quality, lower cost

• Synthetic will operate in a high quality niche

• CO2 footprint becoming a consideration

• Coated Spherical Graphite to become cheaper• From $12-16/kg today to sub $8/kg

• Silicon to not be a major substitution factor medium term• 3-6% additive to improve capacity

Graphite trends to watch…

Cobalt

Cobalt – 5 key stats

• 98% of cobalt mined as a byproduct of copper and nickel

• Lithium ion batteries do not contain cobalt metal but rather cobalt chemicals

• Demand for cobalt chemicals are driving price rises, not metal

2016 Global cobalt mined supply 2016 global cobalt refined supply

DRC 64% China 57%

Source: Benchmark Mineral Intelligence

Cobalt’s battery evolution

Cobalt demand by sector 2016 -percentage

Batteries 52%

Cobalt demand by sector 2020 - percentage

Batteries 59%

Source: Benchmark Mineral Intelligence

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